Sprint Nextel expands unlimited calling

Sprint Nextel Corp.s limited experiment of offering subprime subscribers allyoucanuse cellular voice minutes and text messaging appears to have been a success, with the company expanding the service to a dozen states and adding unlimited Web surfing.

Sprint has offered the unlimited program through its Boost Mobile brand in Texas and California since this spring.

The company said 100,000 people signed up for the service during the second quarter, paying $45 to $55 a month to make unlimited local and longdistance calls while calling from their home calling area. Adding unlimited texting costs an additional $5 a month.

Sprint, based in Reston, Va., with operational headquarters in Overland Park, Kan., announced Tuesday that it has extended the unlimited service to 10 additional states, including Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Nevada, North Carolina, Oklahoma and Tennessee.

With the metrics achieving to the expectations, weve decided to go to the next phase of expansion and that was to the South, said Michael Lanzon, vice president for sales and distribution for Irvine, Calif.based Boost.

He declined to say how many more customers signed up in the third quarter because Sprint is expected to announce quarterly results next week.

Besides the unlimited calling, the company said that starting on Nov. 12 it would begin offering unlimited Web browsing for an additional $5 a month and allow subscribers to expand their local calling zone for another $5 a month. For example, a customer in Houston could expand their calling area to include Dallas.

Calls outside their local zone cost 15 cents per minute.

Boost Mobile subscribers dont sign an annual contract, instead paying upfront for their service monthtomonth. Initially modeled as a youthoriented brand, Sprint Nextel has attempted to use Boost Mobile to grab consumers with spotty credit who might not qualify for regular service, many of whom Sprint Nextel has jettisoned by increasing its credit requirements.

Analysts have voiced concern that the unlimited service could encourage more lucrative Sprint customers who pay their bills at the end of the month to switch down to the cheaper service. They also said it wont help Sprint catch up to industry leaders AT&T Inc. and Verizon Wireless, as neither is as interested in attracting subprime customers.

But they said Sprint can stave off some customer losses to MetroPCS Communications Inc. and Leap Wireless International Inc., which offer similar unlimited plans.

I think its a defensive move, Jonathan Atkin of RBC Capital Markets said Wednesday. Better to see some modest cannibalization and do it yourself than see a competitive loss to those competitors.

Sprint Nextel shares, which have traded in a 52week range of $16.93 to $23.42, closed down 16 cents at $17.49.


Source: http://www.businessweek.com/ap/financialnews/D8SFQT2G0.htm